But tell me why ANCFX can't be expected to beat the market or at least come close over the next 5-30 years? They've done it for the last fifty--was that just luck?
The issue is the word "market". The S&P500 is not the market -- it's just the most commonly used Large Cap Index. What you need to do is a analysis of ANCFX holdings to calculate the equivalent index combination would be. Here's my off-the-napkin analysis:
Start with market cap
* S&P500: average market cap = 53B
* ANCFX: 38B
* NAESX (Vanguard Small Cap Index): 1.5B
53B (x) + 1.5B (1-x) = 38B
Solve for X --> that gives you 71% Large Cap, 29% Small Cap. We will round to 70/30.
Next we use Morningstar's X-Ray feature to find out value versus growth:
* S&P500: 53.5% value, 46.5% growth
* ANCFX: 52.5% value, 47.5% growth
Looks about the same. We can stick with the blend indexes.
Finally, we look at international:
* S&P500: 100% domestic
* ANCFX: 66.5% domestic, 27.5% international, 6% cash
Rounding off some of the numbers, a good index portfolio to check ANCFX against is:
* 5% Short Term Bonds (Lehman Brothers 1–5 Year Government/Credit Index)
* 45% Domestic Large (S&P500)
* 20% Domestic Small (Russell 2000)
* 20% International Large (MSCI EAFE)
* 10% International Small (MSCI EAFE Small)
I'm sure the ANCFX prospectus has more detailed info on the holdings but the above is a good ballpark to check against. Without even looking up the results, I would say this portfolio would be a much tougher matchup for ANCFX to consistently beat. Small caps historically have beaten large caps by 1.5% so 30% small caps gives you a 0.5% bump with decreased volatility. The international portion has roughly the same return as domestics but due to some non-correlation, improves overall performance and volatility.